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Four PA Brexit Update – 4th May

Following the election of Donald Trump in 2016, two American scientists observed that “most people make political decisions on the basis of social identities and partisan loyalties, not an honest examination of reality.”

You can see the parallels of this with Brexit, not necessarily the electorate’s decision to vote leave, but more in what the Government has delivered since. Red lines have been drawn and knee-jerk decisions taken, even if they seem to contradict what economic and geographic reality dictates and the calls of many business sectors.

The intense political pressure placed on the Prime Minister by her backbench colleagues has been an important factor here, combined of course, with her lack of an overall majority in Parliament. Yet when the history of Brexit is written we may wonder how the Government bowed to short-termism again and again, beginning by triggering Article 50 without a clear vision of our future relationship with the EU. This week has been a stark reminder of this lack of clarity with the unprecedented situation of the Prime Minister being overruled by half-a-dozen senior members of her cabinet regarding the UK’s future customs arrangements with the EU.

Is the parrot dead or just sleeping?

Theresa May’s authority was dealt a significant blow on Wednesday at a crunch meeting with her Brexit ‘War Cabinet’ – the objective of which was to achieve consensus on a new customs relationship with the EU.

It didn’t go to plan. The majority of her inner cabinet opposed May’s “hybrid” customs partnership plan – which would entail a ‘mirroring’ of existing arrangements that would have seen UK officials collecting tariffs on behalf of the EU for any goods entering the UK that were subsequently destined for anywhere else in the bloc.

Instead the leading Brexiteers in the Cabinet – David Davis, Liam Fox and Michael Gove – are in favour of the so-called “maximum facilitation” model in which customs borders between the UK and EU would be eased by utilising new technology and “trusted trader” schemes. An unintended consequence of Amber Rudd’s resignation has been the loss of one of the Cabinet’s leading and most persuasive soft Brexit voices. By contrast, her replacement as Home Secretary, Sajid Javid, despite reluctantly campaigning for the Remain side during the referendum is now more supportive of a clean break with the EU. His siding with the “max fac” faction was decisive in the informal vote of the War Cabinet.

One senior Brexiteer called May’s proposed customs partnership “a dead parrot” – but is it? The Prime Minister and her senior team will not give up as easily as some might expect. Why? They see this hybrid option as the only way to get an all-UK solution on customs, avoid a goods border in Irish Sea or in Ulster and to ensure some independent trade policy.

The meeting on Wednesday was deliberately left unresolved and the Prime Minister indicated she would look to “revise” her plans, giving the impression that this isn’t over yet. Speculation has now turned to whether Ministers on the fence –such as another reluctant remainer, the Defence Secretary, Gavin Williamson – can be offered a carrot big enough for him to side with the Prime Minister.            

Feeling the heat

Even if the Prime Minister can win the customs arrangements argument with her Cabinet, there are bigger hurdles still to overcome. For instance, the EU has rejected the hybrid plan previously and could do so again on the basis that the UK as a third country cannot be trusted and that the proposals would place too much of a burden on business and incur too much of a cost on the EU side.

Meanwhile in Parliament, the House of Lords continues to make its mark on the EU Withdrawal Bill. Their latest intervention handed a 10th defeat to the Government on the bill as Peers backed an amendment guaranteeing that leaving the EU must not damage the terms of the Good Friday Agreement.  This includes ruling out the return of any form of hard border once the UK quits the customs union and single market.

A real headache for the Government is whether the Lords’ amendments will be upheld by a majority of MPs when the legislation reverts to the Commons for a vote of approval.  A similar issue is that Theresa May is now facing the very real possibility of being defeated on the upcoming customs bill and the trade bill by her own pro-remain backbenchers. The smart money is on the Government delaying the introduction of these key Brexit bills to the Commons until the autumn in an attempt to avoid defeat. May is banking on a positive deal being reached with the EU by then that (she hopes) will keep her party unified. Her Government is walking a tightrope however, with the Brexit legislation timetable already very tight and the bills needing to be passed before Brexit day on 29th March 2019 to avoid a legal and regulatory vacuum.

Finally, the latest cause for concern is the news that the EU has backed the Republic of Ireland’s right to veto the UK/EU trade talks next month if Dublin is unimpressed with Downing Street’s solutions for Northern Ireland. Between the Brexiteers in cabinet

The EU wants to see definite progress at the next EU Council summit on June 28-29 which means the next eight weeks will be a crucial period for the UK Government to settle its own disagreements, see off any further parliamentary disruption and try to sell its proposed solutions to Brussels and Dublin.

 

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